Are you covered? Compare quotes for car, life and business insurance right now!

S&P affirms Oz's AAA rating

Thu, 20 Sep 2012 8:28 AM

Share

Your Email

Standard & Poor's headquarters AFP

International credit agency Standard & Poor's on Wednesday affirmed mining-driven Australia's AAA rating with a stable outlook, but warned about its growing reliance on the Chinese economy.

Australia is one of only a handful of nations to hold the top rating, with its economy growing a solid 0.6 percent in the three months to June and 3.7 percent from a year earlier.

But the figure was less than half the upwardly revised 1.4 percent in the first quarter of 2012 and below analyst predictions of 0.8 percent, held back by key trade partner China's slowdown and European woes.

S&P said the AAA rating reflected Australia's "ample fiscal and monetary policy flexibility, economic resilience, public policy stability, and a financial sector that appears to be sound".

"These stem from its growing dependence on trade with China. If demand for Australia's resources were to weaken, this could lead to a range of disorderly dislocations in its economy, including in its labour and property markets."

Australia was the only advanced economy to dodge recession during the global downturn due to the relative resilience of Asia - a crucial market for its resources exports - along with a series of government stimulus packages.

Treasurer Wayne Swan hailed the rating.

"(We are) one of seven countries in the world with that rating," he said.

"This rating reflects sound fiscal policy, the resilience of the Australian economy and that's good news for Australia."